Marginal Column

A continent on the move

November 2012

 

Africa’s economy continues to grow. The reason is not just its wealth of natural resources.

 
 

Experts at the World Bank now see Africa in the same situation as Asia, 20 to 25 years ago. Africa’s economy is growing strongly and steadily, even though the differences within this huge geographical area – home to over a billion people in 54 nations – are pronounced. The entire continent’s GDP grew by 5.3 percent per annum from 2001 to 2011. In comparison: Over the same period the eurozone achieved average growth of just over one percent. The remarkable thing about this is that – with the exception of Zimbabwe – every country in Africa has shown upward economic de­velopment over this period.

 

A wealth of natural resources and diversification

For many of these economically successful countries the driving force behind their upward movement is an abundance of natural resources. Rocketing prices for oil and gas are responsible for most of this growth. For example, Nigeria is Africa’s number one crude oil exporter. It exports over two million barrels of crude every day. This country has demonstrated that other branches of the economy can also benefit from business in mineral resources. The banking and telecommunications sectors in particular are expanding rapidly, also due to economic reforms initiated after 2008. Apart from oil, Africa’s most notable natural resources are gas, minerals, and rare earths such as cobalt and coltan, both of which are needed to produce electronic equipment. However, according to a study carried out by McKinsey, this wealth of nat­ural resources is only one factor in the growth of Africa’s GDP.

Two-thirds of this upward trend can be traced to other sectors such as wholesale and retail, agriculture and transportation. Successful countries like Egypt, Morocco, South Africa and Tunisia have managed to diversify their economies. Natural resources and agriculture are losing ground there, while the manufacturing industry and the service sector are expanding. Take for example the telecommunications sector. The continent now boasts that 400 million people own a mobile phone. This in turn allows people to access the banking system by easy-to-use mobile banking and thus to make them an active part of the African economy. The number of Internet subscribers has exploded by 2,000 percent over the last ten years.

Social change

According to the African Development Bank, Africa’s middle class has grown by 3.1 percent per year since 1980 and now numbers 350 million people. This is considerably more than the total population, which grew by 2.1 percent in the same period. This is a significant development, since a strong middle class boosts do­mestic demand which in turn promotes the development of local commercial enterprises. Over the long term, this makes these countries more independent of world demand for raw materials.

One of the greatest challenges facing Africa is its demographics. The Deutsche Stiftung Weltbevölkerung (German World Population Foundation) estimates that the total population of the continent is likely to grow from today’s one billion to 3.6 billion by the year 2100. This formidable growth in population does entail risks – but opportunities as well. It makes supplying adequate nutrition to the populace more difficult and is a burden on the infrastructure, which is still quite fragile. However, if they succeed in giving the many young people a good education, then there will be no shortage of manpower. This has prompted many African states to put education policies at the top of their priority lists.

Infrastructure is crucial

Another promising field for a continuation of Africa’s positive development is the renewable energy sector. Solar energy and hydroelectric power, which have as yet only been developed to a small extent, could take the place of gas and oil exports. These sources are also sufficient to supply enough power to cover all the needs of this huge continent, since electricity generated from renewable energy is often produced locally. An additional bonus would be the creation of new jobs since knowledge is needed on site to set up and maintain the generating facilities. According to the World Bank, large sums will have to be invested in other types of infrastructure. Continuing road building programs, improving power and water supplies, pacifying regional conflicts, and nurturing political stability can all combine to ensure that Africa can continue to follow its move forwards.

A multi-faceted continent

To speak of “Africa” is just as difficult as speaking of “Asia” or “Europe”. While Europe comprises 46 national states, home to over 700 million inhabitants speaking 225 different languages, Africa can claim even greater diversity. More than a billion people live in its 54 countries and speak more than 2,000 different languages. There are major economic differences not only among but also within these countries. Namibia and South Africa are the countries with the most extreme disparity in terms of income distribution, worldwide.

GDP figures for the African states also vary widely. In comparison with the Democratic Republic of Congo, with its GDP of 352 dollars per capita, South Africa is relatively wealthy, with per capita GDP of 10,223 dollars.